BT Names Patterson CEO as Livingston Takes Minister Post

BT Group Plc (BT/A) named Gavin Patterson
chief executive officer, taking over from Ian Livingston who
leaves the post in September to become minister of state for
trade and investment.

Patterson, 45, is head of retail operations and has been at
London-based BT since 2004, according to a statement today from
the biggest U.K. fixed-line phone company.

BT is picking an insider to continue the modernization of
the 165-year-old company. Livingston, who took the CEO role in
2008 after managing the retail and finance teams, began
transforming the fixed-line carrier by building a fiber-optic
network to offer high-speed Internet access and creating the BT
Sport channels to compete for pay-television customers.

“It has been an incredibly hard decision to leave BT at
such an exciting time,” Livingston, 48, said in the statement.
“We have made huge progress over the last few years, but I know
there is still so much that BT can and will do.”

BT fell as much as 4 percent after the statement. Shares
were down 1.8 percent to 313.70 pence at 4:00 p.m. in London.
The stock had gained 38 percent this year before today.

Livingston will join the government in December replacing
former HSBC Holdings Plc Chairman Stephen Green.

“He will bring huge talent to a vital national effort,”
U.K. Prime Minister David Cameron told lawmakers in the House of
Commons.

Revenue Struggles

Despite his efforts, Livingston couldn’t reverse sales
declines as BT’s base of fixed-line customers opted for digital
and mobile phone service and a Europe-wide recession crimped
business spending.

BT Sport, set to go live in the U.K. this summer, will be
free to customers of its broadband Web packages. The company is
betting access to Premier League soccer games and ESPN programs
across TVs, online and through applications for mobile phones
will win subscribers who had resisted paying for TV before.
Shares of British Sky Broadcasting Group Plc (BSY), the pay-TV
provider part-owned by Rupert Murdoch’s News Corp., dropped the
most in almost two years after BT Sport was unveiled on May 9.

BT’s arrival as a BSkyB rival has led to spats over the
terms for access to each other’s channels. U.K. communications
regulator Ofcom said today that it would investigate BT’s
complaint that Sky isn’t giving it wholesale access to Sky
Sports channels “on fair terms.”

BT’s claims are “entirely without merit,” BSkyB said.

The BT Sport initiative will be expensive. BT has said the
rights will probably cost 1 billion pounds ($1.2 billion) in the
next three years and the service will lose money in the near
term.

Patterson’s Background

Patterson joined as managing director of BT Retail’s
consumer division. Four years later, he was promoted to head the
group when Livingston became CEO. He’s worked as European
marketing director for Procter & Gamble Co. (PG), and is president of
the U.K. Advertising Association.

Before joining BT, Patterson lead the consumer division for
Telewest Communications Plc, which was then the second-biggest
cable-television company in the U.K. The company ran into
difficulties meeting debt obligations after a series of
acquisitions to help it compete with BSkyB and BT. Telewest was
acquired by NTL Inc., its larger competitor, which became part
of Virgin Media in 2006. Liberty Global Inc., owned by
billionaire John Malone, closed its $16 billion purchase of
Virgin Media this month.

BT Retail, which sells broadband and phone access to homes
and small-to-medium sized businesses, is the company’s largest
unit, accounting for almost a third of sales.